Start a Business in Spain from the UK as an Expat (2024) – Comprehensive Guide

Learn how to successfully start a business in Spain from UK as an Expat in 2024. Access vital information on legal requirements, structure, procedure, immigration routes and more.

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Business in Spain from the UK

Opening a business in a foreign country can be challenging, but understanding the key regulations and legal implications is crucial for success. Spain, a popular destination for expats, offers various opportunities, yet requires adherence to specific administrative processes, tax obligations, and cultural adjustments. Below is a detailed guide on how to start a business in Spain, covering legal structures, tax, and insurance considerations, as well as the overall business culture.

Business Culture in Spain

Spain has a unique business culture characterized by a more laid-back approach compared to many other countries. Although some traditional practices like long lunches remain, certain outdated customs such as siestas are no longer prevalent in the corporate world. Spain ranks 15th globally in the World Bank’s Ease of Doing Business Survey, making it relatively easier to start a business here compared to its neighbors.

Legal Structures for Businesses in Spain

Spain offers various business structures, with options tailored to different scales and goals:

  1. Self-Employed (Autonomos): Individuals who work as freelancers or sole traders can register as self-employed with the Spanish tax and social security authorities. They are required to submit quarterly VAT returns and an annual income tax return.
  2. Sole Traders and Partnerships: This is the simplest and most cost-effective option, without the need for minimum capital investment. However, personal assets can be at risk if the business incurs debt, as there’s no legal distinction between personal and business assets.
  3. Limited Companies (SL – Sociedad Limitada): The most common structure for larger businesses, SL offers limited liability, but comes with higher financial and administrative obligations. A minimum share capital of €3,000 is required to incorporate an SL, along with annual tax filings and compliance with corporate governance rules.

How to Start a Business in Spain from the UK as an Expat?

Here are the main steps involved in setting up a business in Spain from the UK as an Expat:

  1. Obtain a foreigner’s tax identification number (NIE).
  2. Register your company name with the Mercantile Registry.
  3. Get a company tax identification number (CIF).
  4. Open a business bank account.
  5. Sign the deed of incorporation.
  6. Register the company with local authorities.
  7. Register for social security.

Visa and Permits for Non-EU Citizens

Non-EU citizens need a valid work permit to start a business in Spain. The Spanish government requires proof of financial stability, business viability, and the potential to create local employment. Some expats may also qualify for a Spain Entrepreneur VISA, Spain Self-Employed VISA which offers residency in exchange for significant financial investments.

Tax and Social Security Considerations

Taxation in Spain varies depending on the business structure:

  • Sole Traders: Pay income tax quarterly and file an annual return.
  • Limited Companies: Pay corporate tax (usually 25%) on worldwide profits, with a reduced rate for the first two years.
  • VAT: Most businesses are required to charge VAT at 21%, although reduced rates apply for certain industries.

For social security, sole traders contribute approximately €265 per month, while limited companies are required to contribute 29.9% of employee salaries.

Who Can Start a Business in Spain?

Both EU and non-EU citizens can start businesses in Spain, though non-EU nationals face additional requirements, such as obtaining a work permit. The process can vary based on the business structure chosen, with EU citizens typically facing fewer bureaucratic hurdles. For those looking for support, firms like Xolo cater specifically to expat freelancers, offering services to streamline the business registration process.

Business Insurance in Spain

Business owners must have sufficient insurance to protect their employees, property, and third parties. Essential types of insurance include:

  1. Personnel Insurance: Covers employees in case of accidents or illness.
  2. Public Liability Insurance: Protects against claims from third parties for injury or damage.
  3. Buildings and Contents Insurance: Secures your premises and stock.

Employing Staff in Spain

Spanish labor laws are stringent, with employees entitled to 30 days of vacation annually and paid 14 times a year (12 monthly payments plus extra in July and December). Businesses must also adhere to the country’s minimum wage and working hour regulations.

Opening a Business Bank Account

Once you’ve registered your business, you’ll need to open a business bank account in Spain, which requires proof of registration and a deposit of at least €3,000 for limited companies. Most major Spanish banks, such as Santander and BBVA, offer tailored business banking solutions.

Non-Profit Companies and Offshore Businesses

Spain also allows for the establishment of non-profit organizations, either as foundations or associations. Offshore companies, while offering potential tax advantages, come with their own regulatory requirements and considerations.

Read More: Business opportunities in Spain for British entrepreneurs

Conclusion

Starting a business in Spain is an exciting opportunity, but it requires careful planning and adherence to legal and administrative steps. From understanding the local business culture to registering your company and dealing with tax obligations, this guide offers the key information to help you start a business successfully in Spain.

If you are planning to incorporate your company in Spain from the UK, schedule a call with a Spanish incorporation specialist today.

Frequently Asked Questions

Can I start a business in Spain from the UK?

Yes, you can set up a business in Spain as a UK citizen, even after Brexit. Spain encourages foreign talent and entrepreneurship. However, UK citizens will need to acquire the correct visa and tax identification numbers.

What are the steps to start a business in Spain as an expat?

Key steps include:

  • Obtaining a foreigner’s tax identification number (NIE)
  • Registering your company name with the Mercantile Registry
  • Obtaining a company tax identification number (CIF)
  • Opening a business bank account
  • Signing the deed of incorporation
  • Registering for social security

Do I need a visa to start a business in Spain as a UK citizen?

Post-Brexit, UK citizens require a work visa to reside and start a business in Spain. You must apply for the visa in the UK, providing proof of investment capital and a viable business plan.

How much capital is required to start a business in Spain?

The minimum share capital for setting up a limited company (sociedad limitada) is €3,000. For other business structures like sole traders, no minimum investment is required, but you are personally liable for debts.

Can a UK expat set up a non-resident company in Spain?

Yes, foreign nationals can set up businesses in Spain, even if they do not have residency. However, obtaining legal residency can offer more advantages for managing the business smoothly.

Are there tax incentives for new businesses in Spain?

Yes, new limited companies benefit from a reduced corporate tax rate for the first two years—15% for profits up to €300,000 and 20% above that.

What are the common business structures in Spain for expats?

Common structures include being a sole trader (autonomo), forming a partnership, or establishing a limited company (sociedad limitada).

Is it easy for British expats to employ staff in Spain?

Yes, but there are specific labor laws to follow, including contracts, salary regulations, and registering employees with social security. Workers generally receive 14 payments a year and have 30 days of vacation annually.

What types of business insurance are required in Spain?

Businesses must have public liability insurance, personnel insurance, and buildings and contents insurance to cover accidents, sickness, and damage.

Can I manage my UK business while starting one in Spain?

Yes, many expats run businesses in Spain while managing their UK operations. You can also set up a branch or subsidiary in Spain if you want to expand your UK company.